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Civil Litigation Dicta - Orders - Geographical Range

. Castillo v. Xela Enterprises Ltd.

In Castillo v. Xela Enterprises Ltd. (Ont CA, 2024) the Court of Appeal considered the geographical range of civil (and criminal) orders, here international:

[59] The appellant submits that there can be no sufficient link because the act that was found to amount to contempt took place entirely outside Ontario. He also argues that he obtained no benefit in Ontario from making the Declaration.

[60] The motion judge was correct to reject these submissions. The real and substantial link test broadens the inquiry from looking only at the location of the actions of the alleged contemnor, to the connections or links between the impugned conduct and Ontario. The test is not whether the contemnor has links to Canada, but whether the breach of the law or the court order has a “real and substantial link” to Canada.

[61] This concept was fully explained and applied by this court in R. v. Greco (2001), 2001 CanLII 8608 (ON CA), 159 C.C.C. (3d) 146 (Ont. C.A.), leave to appeal refused, [2001] S.C.C.A. No. 656., and more recently in R. v. Barra, 2021 ONCA 568, 157 O.R. (3d) 196.

[62] In Greco, while he was subject to a probation order following convictions for assault and threatening death which required him to keep the peace and be of good behaviour, the appellant viciously assaulted his girlfriend on a trip to Cuba. The Cuban authorities chose not to become involved, but they alerted Toronto police, and the appellant was charged with breach of probation. He argued that the court did not have territorial jurisdiction to enforce the probation order for conduct that did not take place in Ontario.

[63] Moldaver J.A. explained that there is a difference between “jurisdiction to prescribe” and “jurisdiction to enforce”: at para. 15. Essentially, a state cannot enforce its domestic laws in another state without the consent of that state. However, the principle of territoriality does not prevent a state from enacting laws or issuing court orders that are enforceable locally, but that govern conduct outside the state: at para. 17. As a result, a court in Canada may issue a probation order, enforceable in Canada, that binds the conduct of probationers both in Canada and outside the country: at para. 23. Moldaver J.A. also observed that policy reasons strongly support that approach.

[64] On the issue of whether a probation order binds the probationer’s conduct both in Canada and outside Canada, the court drew the common-sense inference that absent a term indicating the contrary, the order binds the individual’s conduct, no matter where that person is: at para. 29.

[65] Applying the “real and substantial link” test from Libman, the court first found that there was no concern regarding comity with Cuba, then stated at para. 42:

Once it is understood that Canada is the only country that has an interest in ensuring compliance with orders made by Canadian courts, little more need be said in terms of the “real and substantial link” test. The probation order in the instant case was imposed upon the appellant by an Ontario court. It required him to keep the peace and be of good behaviour both at home and abroad. Importantly, the offence in issue arises out of a breach of that order, a factor which I consider to be crucial in the application of the “real and substantial link” test. To the extent that he breached that order, Canada alone has an interest in bringing him to justice and it may do so. The requirements of international comity do not dictate otherwise.

[66] The Libman analysis was recently applied in the context of a conspiracy charge by this court in Barra. Mr. Barra and others were charged with agreeing to bribe officials of India in connection with the awarding of an Air India contract to a Canadian company, Cryptometrics Canada. Territorial jurisdiction was one of the issues at trial and on appeal.

[67] In applying the “real and substantial link” test, the court looked at all the activities that constituted the offence and how many of them were connected to Canada including: the alleged conspiracy was about a Canadian company paying bribes to Indian officials to secure a contract; the appellants were the company’s representatives involved in the agreement to pay the bribes; the appellant Barra approved the payments and was the directing mind of the company. The court found to be of particular significance the fact that the substantial fruits of the contract would be obtained in Canada, even though that fact was not strictly part of the acts that constituted the offence: at para. 54.

[68] The court specifically rejected the argument that it should focus on the physical location of the offence rather than the connections to Canada. The connections were what “legitimately gave this country an interest in prosecuting the offence”: at paras. 54-55, citing Libman, at para. 71.

[69] Applying Libman, Greco and Barra to the facts of this case, the motion judge made no error in focusing on the connections to Canada, rather than the physical location of the appellant when he made the Declaration. She correctly found a real and substantial link based on the significant connections between the swearing of the Declaration and the province of Ontario:

1) The Appointment Order was made in Ontario;

2) The Order applies to Xela, an Ontario corporation;

3) The appellant is the sole common shareholder and president of Xela, the company in receivership;

4) The appellant signed the Declaration in Guatemala in his capacity as the President and director of Xela;

5) The Declaration makes allegations with respect to Xela, an Ontario company and its wholly-owned subsidiary, Gabinvest;

6) The Appointment Order was obtained in connection with the enforcement of a judgment obtained by Ms. Castillo “in lengthy Ontario-based proceedings, against Xela, Mr. Gutierrez and others.”

[70] Of particular significance is that no country but Canada is concerned with enforcing the Ontario Appointment Order. In addition, as in Barra, there was clearly a benefit to the appellant in Ontario in undermining and interfering with the Receiver’s ability to obtain the information it needed about LISA and Gabinvest in order to do its job of enforcing the Ontario judgment against the parent company, Xela.

[71] The appellant also argues that the Appointment Order is limited to Ontario by its terms because para. 31 gives the Receiver the power and authority to apply to any foreign jurisdiction for recognition of the Order and for assistance in carrying it out. I agree with the motion judge that, read as a whole, the Order has no territorial limitation and applies to the persons named in the Order whether in Canada or elsewhere. Paragraph 31 is permissive and gives the Receiver the ability to make use of the legal apparatus of other countries where it is necessary to do so. In this case, there was no evidence offered that the Receiver needed any order or other legal authority in Panama or Guatemala to hold the corporate meetings it held or to take any other steps under the authority of the Appointment Order.